Partnership Deed is an agreement between the partners of a partnership firm to carry out the business activities under a common banner of a partnership firm is termed as Partnership Deed. To form a partnership business, a partnership agreement is required. Following are the provision in the absence of partnership deed.
Provision in Absence of Partnership Deed/When Partnership Deed is Silent
In absence of partnership deed or when a partnership deed is silent on any fronts, then the following rules should be applied.
Profit Sharing Ratio: In absence of a partnership deed or when the partnership deed does not provide any provisions relating to profit sharing ratio, then profits and losses are shared equally among all the partners irrespective of their capital contributions.
Interest on Capital: In absence of a partnership deed, no interest shall be allowed to any partners on the capital invested by them.
Interest on Drawings: In the absence of a partnership deed, no interest is charged from the partners on the amount of drawings made by them individually.
Interest on Loans or Advances: Sometimes, partners advance loan to their partnership firm. In such a case, the partners (who advanced the loan) are entitled to receive interest on the loan @ 6% per annum. The interest on loan to the partners has to be provided even in the absence of a partnership deed. As interest on loan is an obligation for a partnership firm, so it is liable to pay such interest under every circumstances,irrespective of profits earned or losses incurred by the firm.
Salary or Remunerations to Partners: In absence of a partnership deed, the partners are not entitled to receive any salary or remuneration for participating in the business of the firm.
The balance sheet is the last financial statement that is prepared by any organization. This statement helps to ascertain the true financial position of an enterprise at the end of an accounting period
A profit and Loss Account is the second financial statement prepared by an organization. This account is prepared to ascertain the net results of a firm in form of net profit earned or net loss incurred during an accounting period.
Accounting software is an integral part of the computerized accounting system. The accounting software should be selected after considering the level of skill and proficiency of the accounting professionals.
Accounting Reports: When the collected data is processed and manipulated in a useful sense that can be understood by the users without any ambiguity, then it becomes information.
Transaction Processing System (TPS) refers to a computerized system that records, processes, validates, and stores routine transactions that occur in various functional areas of a business on daily basis.